FM Project End Term

Due in my office: Any time before the commencement of the final examination (exam hall okay)
FMI COC Project Banikanta Mishra
Answer all questions. All questions carry equal points.
You should choose a company ("your company") whose stock (and preferably also bond) trade
in an Indian exchange. Find out some financial data pertaining to this firm (on a recent date,
say, 31st December or 31st March), from CMIE Prowess or any other verifiable source, and
answer the following questions. Confine your answers to one A4 sheet (front and back), printed
with single-space and 1” margin on all sides. You may attach at most one more A4 sheet (use
front and back pages) for appendices, tables, figures, or for showing your derivations; Excel
sheet(s), if any, should also be confined to A4 size. Write only your student-IDs on the last page,
not anywhere else. No names anywhere. There would be penalty for violation of any of the
above instructions.
1. What is the rating, if any, of your company's bonds?

Ans –CRISIL Rating-AA
Moody’s Rating- B1
Sources- CRISIL.com, Moodys.com
2. What is the cost of debt of your company? How did you arrive at this figure?
Cost of Debt = (Interest Paid/Total Debt) x 100
Total debt=20897.87 crores
Interest paid=1952.81 crores
Cost of debt = (1952.81/20897.87) x100=9.34%
Sources- Tata Motors Limited Annual Report 2019-20
3. How much debt does your company have?

Secured loans=20897.87 crores
Non secured loans =0
Total debt=20897.87crores (March 2020)
Sources- Tata Motors Limited Annual Report 2019-20
4. What is the market-value of equity of your company?

Current Price of Stock = Rs 148.45 Crores
Total No. of Stocks = 2,887,348,694
Market Value of Equity = Current Price of Stock * Total No. of Stocks
= 148.45x 2887348694
= Rs.42862.7 crores
Sources- moneycontrol.com
5. What is the Debt/Equity percentage (ratio) of your company?
Total Liabilities = 44202.22cr
Shareholders Equity=18387.65cr
Debt/Equity ratio = Total Liabilities/Shareholders Equity=1.14
Sources- Tata Motors Limited Annual Report 2019-20.
6. What is the Debt/Equity percentage of your company's competitors?
Debt equity ratio of Maruti Suzuki India Limited is 0.00
Debt equity ratio of Mahindra &Mahindra is 2.08
7. How does your company's Return on Assets compare with those of its competitors?
ROA= Net Income/ Total Assets
TATA MOTORS LTD.
Net income is -7668.35 INR crores
Total assets are 62589.87 INR crores
ROA for tata motors is (-0.12)
MAHINDRA&MAHINDRA
Net income is 47,155.59 INR crores
Total assets are 50,502.06 INR crores
ROA for Mahindra &Mahindra is (0.02)
MARUTI SUZUKI INDIA LTD.
Net income is 5208.9 INR crores
Total assets are 62,552.10 INR crores
ROA for Maruti Suzuki India Ltd is (0.08)
From the calculations above, we can observe that the ROA of Tata Motors Ltd is lower than its
competitors.
Sources- Financial Express.
8. How does your company's Interest Coverage compare with those of its competitors?
TATA MOTORS LTD

EBIT of tata motors is 1130 Cr
Interest for tata motors is 1949 Cr
Interest coverage ratio =EBIT/INTEREST=0.58
MAHINDRA&MAHINDRA AUTO
EBIT of Mahindra & Mahindra Auto is 3,229 Cr
Interest for Mahindra & Mahindra Auto is 113 Cr
Interest coverage ratio =EBIT/INTEREST= 28.58
MARUTI SUZUKI INDIA LTD
EBIT of Maruti Suzuki India Ltd is 7,197 Cr
Interest for Maruti Suzuki India Ltd is 132 Cr
Interest coverage ratio =EBIT/INTEREST=54.52
9. Should your company have a better or worse credit-rating than the competitors? Why?
Tata Motors Limited
Long Term CRISIL Rating AA
Mahindra and Mahindra ltd
Long term CRISIL AAA
Maruti Suzuki India Ltd
Long term CRISIL AA
The company should have a better credit rating than their competitors, so that the stock process of
the company keeps on increasing and shares of the company can get traded easily in the share
market.
It also helps the company to issue bonds easily and procure funds for their future investments.
Source- CRISIL.com
10. What is the company's P/E Ratio? Is it higher or lower than that of its competitors?
Why?
Currently the P/E ratio of the company is = Market Value per share/ Earnings per share
Tata Motors Limited
Market value per share = 71.05
Earnings per share = (-21.06)
Currently the P/E ratio of the company is = -3.37
Mahindra & Mahindra
Market value per share- 284.95
Earnings per share = 11.16
Current P/E ratio = 25.53
Maruti Suzuki India

Market value per share = 4288.30
Earnings per share = 187.06
Current P/E ratio = 22.92
Sources – moneycontrol.com
11. What has been the dividend-yield of your company's shares?

Annual Dividends Per Share = Rs.0.00
Price Per Share = Rs 148.45
Dividend Yield = Annual Dividends Per Share/Price Per Share
= 0.00/148.45 = 0.00%
12. What has been the capital-gains-yield on your company's shares?
– P1=Current Price of Stock = Rs 148.45
P0=Original Purchase Price of Stock = Rs 2
Capital Gains Yield = (P1-P0)/P0
= (148.45-2)/2
= 73.2
Sources- Financial Express
13. What has been the average growth in annual dividends during the last five years or so?
– Growth in annual dividends from 2012-13 = 4.83%
Growth in annual dividends from 2013-14 = 0.095%
Average growth in annual dividends from 2012-16
14. What has been the average growth in annual EPS during the last five years or so?
2020 $-2.18
2019 $-6.24
2018 $1.50
2017 $1.50
2016 $2.00
2015 $3.00
2014 $3.50
Tata Motors 2020 annual EPS was $-2.18, a 65.15% decline from 2019.
Tata Motors 2019 annual EPS was $-6.24, a 516.07% decline from 2018.
Tata Motors 2018 annual EPS was $1.5, a 0% decline from 2017.
2017 -25%decline from 2016,2016-33% decline from 2015
(65.15+516.07+0+25+33)/5= 127.84%(Averagely)
15. What has been the company's average Payout Ratio during the last five years or so?
Average Payout ratio= Ʃ (Payout Ratio(NP) each year)/Total number of years
There has been no dividend for last 5 years.
So average payout ratio will be 0.
16. What is the company's cost-of-equity (COE) as per the DDM (dividend discount
model)?
Cost of Equity = Dividends per share/current market value of stock
Dividends per Share=Sum of Dividends/Total Outstanding Shares
Dividends per share=0
Hence the cost of equity will be zero.
17. What is the e of your company?

Tata Motors Limited
e = 1.81
Sources- Economic Times
18. Is the company's e higher or lower than that of its competitors? Why so?
e of Tata Motors is higher than Mahindra and Mahindra (e of 0.83) and similar to that of
Maruti Suzuki India ltd (e of 1.72). This is because the volatility of Tata motors is higher than
that of Mahindra and same as Maruti Suzuki.
Sources- Economic Times
19. Based on your company's e, what is your company's CAPM-COE?
CAPM-COE = Risk free return + βs (Market rate of return – Risk Free rate of return)
= 5.22 + 1.81(9.92- 5.22)
= 12.46
20. How does your estimate of the CAPM-COE compare with your estimate of the DDM-
COE?
CAPM-COE is much higher than DDM-COE.
Sources- Verification from the above answers.
STUDENT ID’S OF GROUP MEMBERS:

UM20081
UM20085
UM20093
UM20097
UM20112
UM20116
UM20120

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Due in my office: Any time before the commencement of the final examination (exam hall okay)

FMI COC Project Banikanta Mishra

Answer all questions. All questions carry equal points.

1. What is the rating, if any, of your company's bonds?

3. How much debt does your company have?

4. What is the market-value of equity of your company?

TATA MOTORS LTD

Maruti Suzuki India

11. What has been the dividend-yield of your company's shares?

Sources- Financial Express

17. What is the e of your company?

STUDENT ID’S OF GROUP MEMBERS:

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